- The drug company Purdue Pharma, the longtime maker of the prescription opioid OxyContin, has been accused of driving the US’s deadly opioid epidemic.
- Purdue and its owners, the billionaire Sackler family, now face thousands of lawsuits over those charges.
- A new settlement proposal could resolve those lawsuits with an unusual approach: restructuring Purdue through a bankruptcy filing into a “public beneficiary trust,” according to The New York Times.
- Purdue’s drug profits would go toward the states, cities and others who have sued Purdue, and be a large part of an up to $US12 billion contribution from the Sacklers and Purdue, according to the Times.
- The proposal would mark a departure from the fates of other companies, like makers of tobacco and asbestos, accused of stoking public-health crises.
- Visit Business Insider’s homepage for more stories.
Could profits from the prescription opioid OxyContin help heal the damage wreaked by addictive opioids in the US?
In an unusual solution reportedly proposed as part of litigation against OxyContin-maker Purdue Pharma and its billionaire owners, the answer might be yes.
That’s according to a new report from The New York Times, which said that the proposed settlement could turn Purdue, a privately held company owned by some members of the Sackler family, one of the richest families in the US, into a “public beneficiary trust” by way of a bankruptcy filing.
Under that structure, profits from OxyContin and other Purdue drugs could one day go toward states, cities, and others that have sued Purdue and the Sacklers over the impact in their communities, The Times reported.
The new proposed arrangement for Purdue Pharma speaks to the fact that even the deep pockets of the drugmaker and its billionaire owners are “not deep enough,” Amanda Starc, an associate professor of strategy at Northwestern’s Kellogg School of Management, told Business Insider.
Opioid lawsuits have targeted other companies, including drugmaker Johnson & Johnson and large drug distributors like Cardinal Health. This week, in an Oklahoma case accusing J&J of fuelling the US opioid crisis, a judge ordered J&J to pay $US572 million. J&J said that it did not cause the opioid crisis in Oklahoma and that it would appeal.
“There’s plenty of liability to go around. The question is, who can actually pay out on that liability?” Starc said. “The sheer toll of the opioid epidemic is staggering, and so we’re stacking that staggering amount up against the profits of a large number of corporations.”
According to the Times report, a large amount of the $US10 billion to $US12 billion that would be contributed by Purdue and the Sacklers in a “tentative” proposed settlement would come from the new “public beneficiary trust” structure.
Other companies facing broad health-related accusations have settled or gone bankrupt
When it comes to big companies being accused of stoking public-health crises, there are plenty of precedents.
More than 20 years ago, the tobacco industry came to a settlement with most US states that included it paying at least $US200 billion to the states, over about 25 years, for public-health programs, including tobacco-related measures.
The tobacco industry example is the clearest analogy to today’s opioid litigation, Northwestern’s Starc said, because it “really [looked] at – what are the harms done by tobacco and how can we start to rectify those harmed, by taking the profits these earned and redistributing to the folks that were harmed?”
The tobacco litigation did set up a national foundation focused on youth tobacco use, and called for the end of various nonprofit tobacco-related groups, but did not go as far as the Purdue settlement could.
An asbestos case in the 1990s involving 20 companies accused of exposing workers to the cancer-causing substance, meanwhile, settled for more than $US1 billion.
In other cases, companies have sought protection through bankruptcy.
Recently, for instance, a key supplier of talc to Johnson & Johnson, whose baby powders have been accused of causing cancer, filed for bankruptcy earlier this year, citing the thousands of lawsuits against it. (J&J has denied the accusations, as has the supplier, Imerys Talc America.)
Imerys will continue to operate as usual while the bankruptcy process goes on, according to a Bloomberg report. Names like Philip Morris and R.J. Reynolds Tobacco Co. from the tobacco industry settlement are also still around and in business today, making money by selling cigarettes and other products.
Business Insider Emails & Alerts
Site highlights each day to your inbox.